Cultural Influences on International Business Bluefield College February 15, 2010

An Introduction to Culture Cultural Values Enduring beliefs about a specific mode of conduct or desirable end-state Guide the selection or evaluation of behavior Are ordered by importance in relation to one another to form a system of value priorities Enculturation - Process by which individuals learn the beliefs and behaviors from one’s own culture Acculturation - Learning a new culture Assimilation - Maintenance of the new culture, and resistance to new cultures and to one’s old culture Cultural Norms Norms are derived from values and defined as rules that dictate what is right or wrong, acceptable or unacceptable Imperative - What an outsider must or must not do Exclusive - What locals may do but an outsider cannot Adiaphora - What an outsider may or may not do

An Introduction to Culture Cultural Imperatives National Character Time Orientation – is punctuality important? Business Hours – are stores open in the evening or on weekends? Gift Giving – are gifts expected or forbidden between business colleagues? Socializing – are home and work lives integrated or separated? Gender Roles – is there a difference between how men and women are treated? Status Concern and Materialism Other – for example, access (transportation by bicycle, personal automobile, public transportation Cultural Variability Power Distance Uncertainty Avoidance Masculinity Versus Femininity Individualism Versus Collectivism

Obstacles to Cultural Understanding Ethnocentrism A related belief that a particular culture is superior to another and that strategies that are used in the home country will work just as well abroad. The Self-Reference Criterion: The unconscious reference to one’s own value system Dealing with the Self-Reference Criterion Define the marketing goal in terms of one’s home country’s cultural traits, norms, and values Define the marketing goal in terms of the host country’s cultural traits, norms, and values Isolate the self-reference criterion influence and evaluate it to understand how it affects the marketing issue Solve the marketing problem based solely on the unique conditions of the host country.

Global Consumer Culture Trends Shared consumption-related symbols and activities that are meaningful to segments Often attributed to the diffusion of entertainment from the US to the rest of the world Proliferation of transnational firms and the related globalized capitalism Global brands Globalized consumerism and the desire for material possessions Homogenization of global consumption

High- and Low-Context Cultures Low-context cultures rely on elaborate verbal explanations, putting much emphasis on spoken words. Tend to be in northern Europe and North America, which place central importance on the efficient delivery of verbal messages; speech should express one’s ideas and thoughts as clearly, logically, and convincingly as possible. Communication is direct and explicit, no “beating around the bush”. Agreements are concluded with specific, legal contracts.

High Context Cultures A high-context culture emphasizes nonverbal messages and use communication as a means to promote smooth, harmonious relationships. Prefer an indirect, polite, “face-saving” style that emphasizes a mutual sense of care and respect for others; careful not to embarrass or offend others. It is difficult for Japanese people to say “no” when expressing disagreement. Much more likely to say “it is different” -- an ambiguous response. In East Asian cultures, showing impatience, frustration, irritation, or anger disrupts harmony and is considered rude and offensive. To succeed in Asian cultures, it is critical to notice nonverbal signs and body language.

Hofstede’s Classifications of National Culture Individualism versus collectivism refers to whether a person primarily functions as an individual or within a group. Power distance describes how a society deals with inequalities in power that exist among people. Uncertainty avoidance refers to the extent to which people can tolerate risk and uncertainty in their lives. Masculinity versus femininity refers to a society’s orientation based on traditional male and female values.

Individualistic vs. Collective Societies Individualistic societies: ties among people are relatively loose; each person tends to focus on his or her own self-interest; competition for resources is the norm; those who compete best are rewarded financially. Examples- Australia, Canada, the UK, and the U.S. tend to be strongly individualistic societies. Collectivist societies: ties among individuals are more important than individualism; business is conducted in the context of a group where everyone’s views are strongly considered; group is all-important, as life is fundamentally a cooperative experience; conformity and compromise help maintain group harmony. Examples-China, Panama, and South Korea tend to be strongly collectivist societies.

High vs. Low Power Distance High power distance societies have substantial gaps between the powerful and the weak; are relatively indifferent to inequalities and allow them to grow. Examples- Guatemala, Malaysia, the Philippines and several Middle East countries Low-power distance societies have minimal gaps between the powerful and weak. Examples- Denmark and Sweden, governments instituted tax and social welfare systems that ensure their nationals are relatively equal in terms of income and power. Social stratification affects power distance- in Japan almost everybody belongs to the middle class, while in India the upper stratum controls decision-making and buying power. In high-distance firms, autocratic management styles focus power at the top and grant little autonomy to lower-level employees.

High vs. Low Uncertainty Avoidance Societies High uncertainty avoidance societies create institutions that minimize risk and ensure financial security; companies emphasize stable careers and produce many rules to regulate worker actions and minimize ambiguity; decisions are made slowly. Examples -- Belgium, France, and Japan Low uncertainty avoidance societies socialize their members to accept and become accustomed to uncertainty; managers are entrepreneurial and comfortable with taking risks; decisions are made quickly; people accept each day as it comes and take their jobs in stride. Examples -- India, Ireland, Jamaica, and the U.S.

Masculine vs. Feminine Cultures Masculine cultures value competitiveness, assertiveness, ambition, and the accumulation of wealth; both men and women are assertive, focused on career and earning money, and may care little for others. Examples- Australia, Japan. The U.S. is a moderately masculine society; as are Hispanic cultures that display a zest for action, daring, and competitiveness. In business, the masculinity dimension manifests as self-confidence, proactiveness and leadership. Feminine cultures emphasize nurturing roles, interdependence among people, and caring for less fortunate people- for both men and women. Examples-Scandinavian countries- welfare systems are highly developed, and education is subsidized.